Check your check: Why dining surcharges linger long after COVID restrictions lifted

If you're dining out, check your check. It's likely you'll find a fee that wasn't there a few years ago.

Once uncommon, dining surcharges started popping up once restaurants were allowed to reopen after the pandemic. Owners cited the need to cover expenses associated with social distancing and safety.

With the pandemic largely in the public's rearview, diners might have expected surcharges to go away. Instead, some restaurants are adding them and blaming rising operational costs caused by inflation.

“I've seen it, and I don't like it,” frequent restaurant visitor Chip Murphy of Des Plaines said last week as he sampled the fare at Taste of Park Ridge.

Murphy said he's come across vague service fees or additional credit card fees of 2% to 4% while dining out.

“The menu price should be the price you pay,” he said.

The National Restaurant Association's 2023 industry report shows that roughly 15% of restaurants have added fees or surcharges.

Vanessa Sink, senior director of media relations for the group, said restaurants run on tight margins and can't easily absorb rising costs, not to mention the debt that many took on during the pandemic.

“A typical small business restaurant makes about 3 to 5 cents pretax on every dollar spent in the restaurant,” she said.

Sink said the cost of doing business has increased appreciably since the pandemic: 85% of operators say their restaurants are less profitable now than in 2019. Only 6% say their restaurants are more profitable, while 9% say their profitability has remained roughly the same.

Scott Ward of the Four Napkin Hospitality Group owns five restaurants and franchises three others in the suburbs, including Tap House Grill locations in Palatine, St. Charles and Algonquin as well as Chicago Street Pour House and Kitchen in Elgin.

Ward said the costs for food, alcohol, staffing and insurance have increased more than his slim margins can handle. So like other local restaurant groups such as Lettuce Entertain You and Moretti's, he instituted a surcharge on checks late last year.

Lettuce Entertain You and Moretti's both declined to comment for this story.

Ward added a 2% “food surcharge” to diner's checks. It's also printed on his restaurants' menus.

“I thought it was reasonable and fair, and I'm doing it as a temporary thing until I see things start to stabilize,” he said. “I've never done it before in the history of our little company.”

So why doesn't Ward simply raise the menu prices at his restaurants? He says it's a fear of “sticker shock” from his customers.

“The restaurant consumer goes to the grocery store and knows what they can buy a burger for, but they don't know all the other costs sunk in to give them that burger,” he said.

Ward, who has owned Tap House Grill since 2006, said he considered dynamic pricing as costs rise and fall, but the expense of constantly changing the menu is prohibitive. His restaurants update menus every six to nine months, and he said he'll revisit the charge when the next update comes around.

“The service charge is just for me to get a little absorption of these huge fluctuations,” Ward said, adding that his managers are instructed to remove the fee if customers are upset about it.

“The bottom line for us is a happy guest. We need our guests to leave happy,” he said. “Hopefully, we'll be able to take it off when the next menu comes out.”